Blockchain began as a distributed ledger created for use with cryptocurrency. The software, however, can be used in a variety of industries and projects, not just bitcoin.
In fact, an experimental project in Estonia has shown the positive impacts blockchain can have on the energy sector. Here are some of the findings and how they might be useful on a larger scale.
Promoting Accountability
The beauty of blockchain is its open-ledger transparency. Each block in the chain is full of encrypted data, but anyone with an encryption key can learn where that data has been and where it has been moved and what information the data contains. In Estonia, energy companies using blockchain have kept themselves accountable to the public and to government agencies due to the transparent nature of blockchain.
It works like this: companies like WePower in Estonia use blockchain’s decentralized models as a means of making energy pricing and sourcing data available in real-time to anyone who has bought into WePower’s smart grid. Price and source are available to any member of the grid, that is true transparency.
Providing Informed Choices
The provision of sourcing and pricing data allows consumers to make informed decisions on the kinds of power they need and want. For instance, startups can sign up for smart contracts that allow for a range of flexible options based on price or sourcing or a combination of both. In the event of a main power grid failure, the smart contract would kick in and deliver energy from a clean source like biomass for a market rate price that does not exceed the amounts listed in the contract.
Creating Liquidity
One of the biggest drawbacks of cryptocurrencies is its unavailability beyond cryptomarkets. Since the markets change rapidly, knowing a coin’s market price at any one time is a nearly impossible task. Unlike crypto, energy prices can be set by energy providers. A biomass plant operator in India can stipulate the cost of energy at a given time. Energy consumers are then locked into that price. The consumer knows what they are getting as does the provider.
In the future, blockchain has the potential to leverage decentralization and transparency in ways that will revolutionize the clean energy market and bring confident decision-making to energy consumers across the globe.